Rick Wilkinson
OGJ Correspondent
MELBOURNE, Sept. 21 -- Australia's $20 billion (Aus.) LNG industry has lobbied the federal government to create a category labelled 'Clean Global Contributors' in its proposed emissions trading scheme.
Responding to the government's Carbon Pollution Reduction Scheme Green Paper the Australian Petroleum Production & Exploration Association argues that LNG plays a crucial role in the global move towards carbon constraint. Therefore exporters of the low-emission fuel should not be penalised for the emissions associated with liquefying the gas for export.
APPEA's submission calls on the government to ensure that Australian industries that materially assist the world to move to a lower emissions future are not hampered by a domestic emissions reduction scheme operating in the absence of a broad global scheme.
APPEA said LNG exporters should be included in the government's Emissions Intensive Trade Exposed Industries (EITE) and Strongly Affected Industries (SA), which will be compensated during the initial stages of the scheme.
APPEA Chief Executive Belinda Robinson says the category of Clean Global Contributors should be subject to materiality tests and sit alongside EITE and SA industries.
"Every extra tonne of cooled gas that the LNG industry can export to China will help avoid global greenhouse emissions of up to 6.8 tonnes in net terms," she said, adding, "That's why the growth of the LNG industry is so important—clean-burning natural gas provides a vital stepping stone on the path to low-emissions economies."
Taking up this theme, Woodside Petroleum's Chief Executive Officer Don Voelte delivered another blast at the federal government this week, saying that LNG projects could lose between 15-30% of their aftertax net profits. Woodside's submission in answer to the Green Paper said that LNG-specific modelling by economics group ACIL-Tasman indicated a carbon price of $20 (Aus.)/tonne would reduce aftertax cash flows for LNG projects by 15%.
A carbon price of $20-40 (Aus.)/tonne in 2010 escalating over time would impact a typical 2-train 10 million tonne/year LNG project by increasing operating costs by up to 120%, thus reducing aftertax cash flows by up to 29%. This would result in an effective tax rate of up to 55%.
Voelte said this seriously threatened the competitiveness of the multibillion dollar Australian LNG industry.